Sentiment in Construction Plummets; Material Shortage Continues
Supply problems on German construction sites have once again worsened significantly and expectations in the sector have taken a nosedive at the same time, according to surveys by the ifo Institute. In April, 54.2 percent of companies in building construction reported material shortages, up from 37.2 percent the previous month. For civil engineering companies, the April figure was 46.2 percent, up from 31.5 percent. “These are all-time highs since the start of the time series in 1991,” says ifo researcher Felix Leiss. Business expectations have also deteriorated: in building construction, they fell to minus 46.9 points, once again the lowest level since 1991. In civil engineering, the figure dropped as far as minus 48.6 points.
“Russia and Ukraine are major suppliers of structural steel, of which there is now a shortage. In bitumen, which is needed for road construction and waterproofing, there are further distortions. The production of many building materials is also very energy-intensive, which means recent sharp price increases for energy also threaten domestic production and drive up the cost of building materials further,” Leiss adds.
“For ongoing projects, the question is the extent to which cost increases can be passed on. It’s virtually impossible to calculate new projects. At the same time, developers are seeing interest rates for financing go up,” Leiss continues. As a result, more orders are already being canceled, according to the ifo survey: 7.5 percent of building construction companies reported cancellations in April, up from 4.6 percent in March. Among civil engineering companies, 9.3 percent complained of cancellations, up from just 3.9 percent in March.
